Ad networks had tough '00

Published on December 18, 2000.

Online ad networks ended the year in big trouble. They spent half of 2000 putting out privacy fires, ignited by attacks about their handling of consumer information collected online. Then the dot-com ad blitz they'd been riding imploded.

The stock market sent their stocks tumbling. Even the once invincible ad network and ad management company DoubleClick laid off about 150 workers or 8 percent of its workforce and announced an earnings and revenue shortfall for the next two quarters.

CMGI-controlled Engage also had bad news. Last month, President-CEO Paul Schaut resigned. And last week, it announced losses would be larger than expected. Engage had a net loss of $173.8 million on revenue of $41 million. Layoffs also hit 24/7 Media, which due to revenue shortfalls, chopped 200 employees in a cost-cutting move.

Dana Serman, research analyst at Lazard Freres & Co., said the ad blitz of late 1999 and early 2000 allowed many ad networks to compete by undercutting their competition with rates. The networks also over-hired, something that will have to be adjusted in the coming months. He expects more consolidation in the industry.